Jail bonds paid off; sales tax allocations change

The construction bonds sold 10 years ago to build the Pottawatomie County Public Safety Center on Acme Road, which opened to house prisoners in 2005, are now paid in full.

Comment

The Shawnee News-Star

Writer

Posted Sep. 22, 2013 at 11:00 AM

Posted Sep. 22, 2013 at 11:00 AM

The construction bonds sold 10 years ago to build the Pottawatomie County Public Safety Center on Acme Road, which opened to house prisoners in 2005, are now paid in full.

About $7.6 million in bonds were paid for with the jail's allocations from a county one-cent sales tax that began in 2003.

Mark Cox, accountant for the Pottawatomie County Public Safety Center Trust, said the bonds, which totaled $7.85 million with closing costs, interest and fees, were completely paid off Sept. 1.

"It's a great accomplishment to pay off these bonds," Cox said. "The commissioners have done a tremendous job of getting this facility built and supporting the operations through the bond payoff period and should be congratulated."

Now, Cox said, the trust is planning for the future financial stability of the jail.

"Hopefully an emphasis will be placed on the long-term planning for the facility considering all of the financial hurdles that the trust is facing and will face in the near future," he said.

While the construction bonds are paid off, the permanent one-cent sales tax that became effective July 1 of this year will continue, with 20 percent of that penny tax continuing to go to the jail for maintenance and operations. On average, that tax generates about $125,000 per month, based on treasurer collections, although it varies month-to-month depending on sales.

The jail will no longer get a 5 percent capital improvement amount that was specific to construction bonds, Cox said. That original 5 percent portion could only be used for the bond payment, but it only generated one-third of the total payment, he said, so the deficit was taken out of the 20 percent sales tax monies collected the past 10 years with any remainders utilized for operations.

"I have spent nine years explaining that and I can hardly believe I have been around long enough to see these bonds paid off and the trust financially sound," Cox said.

But despite having 20 percent of a permanent one-cent sales tax in place to help fund future operations, Cox believes a number of issues will negatively impact future revenues for the jail. Just as many things that rely on sales tax, everything is dependent on the economy.

"Any dip in the economy will have a very significant negative impact on the primary funding source, the 20 percent sales tax monies," Cox said.

"The trust will need all the support they can get from the commissioners and public to ensure the future financial stability of PCPSCT and provide for the physical facilities that will be needed in the future," he added.

Cox said the jail's total expenses each year are $3.3 million. Of that, about 50 percent is funded through county funds. The jail, which had been getting about one-half million from the county's general fund in recent years, will receive about $228,000 for the 2013-14 fiscal year with a cut from the county this year. That, along with sales tax revenues from the penny taxes are anticipated to be about $1.75 million, Cox estimated.

Page 2 of 2 - If all stays the same, the jail could make its budget and still see about $140,000 gain this year, "but who knows," Cox said.

"If sales tax drops we would easily be in the hole compared to where we were. We hope to break even at best," Cox added. "There will continue to be big ups and downs as in any business depending on the economy and sales tax revenues and bed rentals to outside agencies."

For example, the jail is months away from losing a revenue source for holding Canadian County prisoners as that county prepares to open a new jail of its own.

"That's approximately $500,000 of income that will no longer be coming in to cover operations," Cox said, adding they don't know how that income is going to be replaced at this time.

Sid Stell, director of the safety center since 2007, said the average daily population of the safety center can reach 400 inmates per day.

Stell, who has worked hard at renting outside beds when possible to build up a reserve fund, said he was hoping to have that available as a rainy day fund much like a household would have to prevent any surprises in case of needed or unexpected repairs.

Because of that fund, which is reported to have about $1.6 million, commissioners dropped the jail's $507,500 request for funding this year in half.

Stell, who said he understands why commissioners made the decision and probably would have done the same thing in their position, said the jail is taking the wear-and-tear daily from those who don't want to be locked up. Now he is now more concerned about being financially ready for needed repairs and maintenance to the aging facility.

"We're not here to make a profit – we're here to run it," he said, adding they'll continue to closely monitor all spending.

Cox said as a long as the facility is doing well financially all funds available after paying for operations are being deposited into that building reserve account that is monitored monthly closely by the trust board.

"The optimum situation would be that the Building Reserve account would be sufficient to literally replace the existing facility 20, 30 or more years from now without the tax payers having to approve and pay for a much larger bond issue in the future than the issue that was just paid off this month," Cox said.